Can People Really Change?

Yes. I believe people can change, that it is possible for anyone to create positive change.

Then how come people seem to be unable to do so?
Even when they know for sure they want positive change…
Be it personal finance, health, relationship, or life-in-general…

I will take a crack at the answers, and I hope you are ready to read with an open mind.

Wrong Expectation

When people talk about change, they often mean that they want change without effort. They want magic pills. Everything people do, everything people want, is a matter of instant gratification. People are high on the instant gratification drug. They want something and they want it NOW. Simultaneously, they want results but they do not want to pay the price.

Obviously, they could not be more wrong, if they truly want permanent positive change. That is why you and I keep hearing people keep talking or thinking about changing this and that but never see any results. Or they tried this and that but nothing worked. Perhaps you are one of them. How can one expect to change with such expectation?

Change is difficult. Change is never easy. And nobody wants to hear that. Change involves being uncomfortable. That is why the phrase “go out of your comfort zone” exists.

The Curse of Habits

The ways one person acts and thinks are habits. Creating positive change means substituting bad habits with new ones. Old habits require discipline to get rid of. New habits require discipline to adopt. The longer you have maintained an old habit, the longer it takes you to learn and adopt a new behavior as a habit. This is the nature of habit. This is the reason why it becomes harder to change the older one is. And yes, it is possible to change even if you are mega-old.

To create permanent positive change is a constant struggle of changing habits. And it WILL take time and patience.

Doing Differently Feels “Wrong”

Change means doing differently, and doing differently is awkward. To change means having lots of awkward moments because things you have never done before naturally feels wrong (and uncomfortable) when you first try it. People are not ready to do “wrong” and be uncomfortable.

One of my favorate quote from the movie 40 year old virgin:

Andy: This doesn’t feel right.
Jay: Of course it don’t feel right! What has felt right for you doesn’t work! You need to try some wrong, dawg.

The Intractable Ego

People is obsessed and in love with being right. They will do whatever it takes to defend what they think is right. Everything else is wrong. When you let your ego dictate you like that, you will be intractable. If your ego is too strong to bend, then it is unfortunate because part of changing means admitting what you think is right is in fact wrong.

Not a fan of finding faults within yourself? Then ask yourself the question, “Do I want to be right, or do I want to be better?” What is your answer?

Options and Backdoors

People make it an option to change. I am not saying you must change. If you are happy the way you are, that is wonderful and I am happy for you. However, if you want to change, you must make the choice to change and not let it just be an option. You cannot leave yourself with backdoors to back out. You must finish what you started.

And you must not dissuade yourself with crappy excuses such as “Yes, but…”, “I am too busy” because whenever I hear people say those, it means they are not ready to do what it takes to change.

Loneliness

Believe it or not, when you start to change your behaviors, you make others uncomfortable. Not only that, you may find yourself having difficulty to communicate to others and to have others understand you. This turns into a certain degree of loneliness each person who is changing must face. And it is possible that you may have to find a whole new set of friends.

Additionally, if you are striving to do something extraordinary, it is certain that you will face discouragement and isolation from people you know. Because not everyone has the same goal and perception to be extraordinary, or as I would call it — greatness. So really, not everyone, not many will understand you.

If you want to change, ask yourself the following questions…
Am I ready to get uncomfortable?
Am I ready to struggle constantly?
Am I ready to do it 24 hours a day, 7 days a week, 365 days a year?
Am I ready to be wrong?
Am I ready to go from the starting line to the finishing line without giving up?
Am I ready to be different from your peers, friends, and family?

Lastly, I think it boils down to the next few questions…
Do I want to be better?
Do I want it bad enough?
Am I ready to do whatever it takes?

Originally posted 2008-05-09 17:26:52. Republished by Blog Post Promoter

Beginning Investors Guide and Considerations

Investing can be intimidating and confusing. For people who’s wholely unfamiliar, the slight thought could be scary and give a headache. It’s like stepping in a foreign land where people speak a different tongue, and one would be in deep trouble if nature happens and bathroom is nowhere to be found.

I was like that. But I was not ready to run away. So I “paid” the market to learn.

After 3 years, I am still no expert. I learned a few things from experience and much magazines reading, news studying, and internet browsing. I put together today’s post as a stepping stone for you who are beginning to invest or still thinking about it. Hopefully it will give you a sense of direction.

Why invest? And getting ready

Investing is for people looking to grow their money beyond the rate of high yield saving account and certificate of deposit. If you feel saving is not enough and too slow to lead you to financial freedom, it will do you well to learn to invest your money. As the saying goes, “Make your money work for you.”

Before you start investing, it will be good to pay off debt with high interest rate, especially ones with doublt digit rate and/or are not tax-deductible. Doing so basically means you make a rate of return equivalent to as if you invest the amount of the debt. Additionally, how can you invest with a clear mind when debt is nagging you constantly.

Once the debt is paid off, saving up a comfortable amount of money is the second line of duty. By “comfortable” I mean an amount of money that will allow you to stay cool in case of emergency (ie. loss of job, doctor visits, urgent car fix…). More on this later under risk tolerance.

Investing is not…

… a get-rich-quick scheme. If that’s what you are looking for, you are looking at the wrong place. It’s important that we get this clear.

Know your time horizon

You must know the amount of time you can keep your money invested in the market. Anything less than 5 years is not enough to ride out the turbulance of the market. It is the general concensus to assume your money to grow 11% on average in stock market, but remember that 11% is an average taken over couple decades. Correct me if I’m wrong.

I would suggest to only consider investing when you have at least a 5 years horizon. Time is your best friend and greatest asset in investing. The more time you have, the more time the money can grow. The more time you have, the better hedge you have against the turbulance in the market.

What about short-term trading? Day trading?

If you can only invest in less time than that, I suggest to choose either cash account or short-term bonds. If you plan to buy a house in a year or two, keep the downpayment money in cash saving. Obviously, you don’t want to lose that money. But I can’t stop you if you want to do otherwise. It is your choice.

If you want to trade short-term or even day trade anyways, first assure that you have the time and effort available to do homeworks:

  • study and understand the balance sheet, income statement, cash flow, and other stats
  • read news about the market sector and undertand its flow and future
  • learn the structure and behaviors of the management of the company
  • learn as much else about the company as possible (if you cannot make sense of the business, forget it)

Again, I don’t suggest doing this because it’s not easy, and it’s more dangerous than it is fun.. But I am not here to stop you, nor can I. I did it at the beginning myself to learn NOT to do it anymore. I paid to learn a lesson that I think is worth every penny. Short-term/day trading is more like gambling. Sure you can hit a jackpot, but you can lose it all just as easily. Plus, you will have “a lot of fun” entering your transactions at tax time.

Know your risk tolerance

Can you stand to see your money fluctuate a lot? Will you sell everything out of panic when you see your portfolio down 20%? You should select investment relative to your risk tolerance.

If you are not very risk tolerant, your portfolio should contain more stable investments that fluctuate less (ie. blue-chip companies and bonds). If you don’t give a darn about the money you are investing, you can bet on riskier investment vehicles. With greater risk, comes possibility for greater gain, and loss.

Your risk tolerance is closely related to how emotionally you are attached to the money you are investing. If you invest money that is of great importance like the fund for an engagement ring, consider yourself divorced. Go create your online dating account before dropping the money.

What I’m saying is that your chance of losing money is much higher due to panic caused by your emotion. This is why it is important to have saving for emergency before you plunge into the market. You don’t want to be forced to sell at a loss because you need to feed your dog.

Basically, the more you can emotionally detach yourself from your money, the better.

Allocation and Diversification

To lower the risk in investing, you diversify. Simply put, don’t bet it all on ONE thing.

Spread your money into different piles. That’s diversification.
Deciding how big each pile is. That’s allocation.

Once you know where to diversify, you decide an allocation that fits your risk tolerance. Your allocation should also change over time. For example, if you observe instability in domestic stocks for the near future, you will want to re-allocate bigger amount to bonds or foreign market. As you approach retirement when you cannot afford to lose your money, you will want to allocate to bonds or even cash.

Watch the expense

If you trade stocks, most brokerage account costs you each transaction, though I know that Zecco offers free trade (I use TDAmeritrade). Assuming otherwise, transaction cost can greatly lower your rate of return, especially if you day trade. If it costs you $10 to buy $1000 of stocks, you automatically lost 1% up front. Another reason to invest long-term.

This is also true for funds. You need to pay attention to its expense ratio. Don’t just look at the rate of return. Your true gain is the rate of return minus the expense ratio minus tax rate. Remember that.

The Simplest Way – Index Fund

Since I talked about cost, it would be blasphemous if I don’t mention index fund. An index fund simply traces a specific index in the market. If you bought an index fund that traces the S&P500, you would have made 11% annually for past few decades. If I further explain, it will becomes insulting to your intelligence.

The greatest benefit of index funds is their low expense ratio, versus traditional mutual funds or privately managed funds. You can have an entire portfolio of index fund, which keeps the cost low. And because they are already diversified, it saves you the tedious job of picking individual stocks and at the same time, provides you with safer and more stable growth than individual stocks.

If you go with index fund, all that needs to be done is to contribute regularly and control your portfolio’s allocation on intervals (quarterly or yearly). Doing so is enough to maintain a steady growth. It’s as simple and easy as it gets! Oh, and Vanguard has been wonderful.

Special accounts for retirement and college fund

Just a reminder… If you are investing for your retirement, you can open an IRA or Roth IRA account that provides tax benefits. Same goes for college fund, whether for you children or yourself, there are 529 plans available that differ by state, each with its own pluses and minues.

Some words of wisdom

Don’t be greedy because it can only be harmful. Don’t try to time the market because it’s a fool’s job. You can never catch the top nor can you catch the bottom.

Understand that a huge part of the market is based on speculation, and speculation is based on human emotion. Human emotion is never a predictable thing in itself and most fickle in nature. Conversely, how can you accurately predict the market? Especially when experts with advanced analysis tools have failed to do so.

Three key points

  • pick solid investment
  • diversify and allocate
  • invest long-term

With that, I’m done. But don’t just take my words and because this is only a quick guide for beginner.
Go study, read, try, and learn from your own experience.
Go build your own intuition of the market.

Let me know how you are doing later.

Originally posted 2008-02-28 23:32:37. Republished by Blog Post Promoter

Do You Have What It Takes?

Thanks to my roommate renting the Bluray, I got to watch the Dark Knight again tonight. There is no argument that it is a great movie. I love it. Let along the acting, I enjoy much of the dialogues between Batman and the Joker. Especially the Joker’s, much of his was quite philosophical.

There is actually a lot to be learned from being a hero, despite we often think that it would be fun to have their power.

Do you know what the toughest part of being a hero is? The toughest part of being a hero is his power. Quoting Spiderman, “With great power comes great responsibility”.

Power is a gift and a curse because with great power, he has a lot more options including many that are not available for normal humans. A hero has to make choices that normal people don’t have to and cannot make either because they lack the abilities or they possess not the same perception. Also, power puts someone at a higher place to have an opportunity to look at the world differently, so there is a choice for him to see or denies what he sees. Put together with the fact that his choices will influence exponentially more people versus one that you or me will make. Boy, so many things to consider and he just has to make the best choice he could. Things may or may not turn out okay, and there are times he must sacrifice something or somebody to do “good”. What a tough job being a hero. Certainly glad neither you nor I is a superhero.

But if we take a minute to think, we normal people aren’t so different.

To get something done, to accomplish a goal, to make a change, you first observe and then you must make the choices for it to happen, many of which maybe simple but not easy. They may not sound conventional to you. They may not feel right. They may make people who are your friends and family dislike you.

As you are growing, as you learn more and obtain more knowledge and wider perspective, which is the equivalent of “gaining power”, you will need make the choices that you couldn’t have made before the growth. As you have outgrown your environment and your peers, if you so desire to become better, you likely need to make more choices that maybe against “common sense”, against “standards”, against “traditions”, against “pervasive believes”. Sometimes, that will lead you out of the crowd and you end up being by yourself.

Imagine you want to buckle down financially, save up, clear some debt, or simply get rich. Perhaps it would be the case that you need to cut back on social outings, or not buy things that others have that you want, or drop a hobby or two, or sell somethings they thought are so important. How easily do you think people can make up their mind to do so? Who would want to do that?

Same applies to health. For example, if you have always been couch potatoes, or going out every night with your best buddies, do you think you can choose to do otherwise? Maybe head to the gym instead? Maybe cook at home? Maybe read up on fitness and nutrition (beyond the marketing crap)? Even though it means you will end up being by yourself?

Would a so-called normal person chooses to be chased after like a fugitive by the people he chooses to protect like Batman did? Would a so-called normal person chooses to bring chaos to break the social norms like the Joker did?

Do you have what it takes to kick old sets of habits? Do you have what it takes to perhaps be different than your family, friends, and peers? Do you have what it takes to make the tough choices, like Batman did? Do you have what it takes to choose “uncommon sense”, like the Joker did? Do you have what it takes to wield your own power? Do you have what it takes to be who you want to be, who you are inside?

I want to get this out of my system before bed, so now… time for bed, peace!

Originally posted 2008-12-12 01:40:09. Republished by Blog Post Promoter

When Both Religion and Science are Strong

A friend sent me this quote last week:

Formerly, when religion was strong and science weak, men mistook magic for medicine; now, when science is strong and religion weak, men mistake medicine for magic.
Thomas Szasz, The Second Sin (1973) “Science and Scientism”

In follow up, I asked the question:

The quote was from 1973. So here we are in 2010, what happen when both science and religion are strong? Guess my answer :)

My friend is very nice and played along with me:

Awww… this is like a quiz at school!>.< Ummmm ... .... Religience or Sciligion as inter-disciplinary research? .... The (Wonderful) Wizarding World of Harry Potter? .... We think we know everything but we know nothing? did I get it? I want a prize if I got it right!

The last answer came very close, so I promised my friend half a price when we meet next :) The answer I had in mind was…

In 21st century, when both science and religion are strong…
…men mistake themselves for God.

Note: God meaning the omnipotent, omniscient grand father figure in the sky, not God as in the Tao, or Brahman or what not.

Originally posted 2010-06-27 21:23:17. Republished by Blog Post Promoter

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